Homework SourseBig Trail Running Company has started to produce running app
Big Trail Running Company has started to produce running apparel in addition to the trail running shoes that they have manufactured for years. They feel that a departmental overhead rate would best reflect their overall manufacturing overhead usage. Based on research the following information was gathered for the upcoming? year:
How much manufacturing overhead will be allocated to the trail running? shoes? (Round any intermediary calculations to the nearest cent and your final answer to the nearest? dollar.)
Machining Department $900,000 Finishing Department $300,000 Estimated Manufacturing Overhead by Department Trail Running Shoes Running Apparel 340,000 machine hours 60,000 machine hours 17,000 direct labor hours 33,000 direct labor hours Manufacturing overhead is driven by machine hours for the machining department and direct labor hours for the finishing department. At the end of the year, the following information was gathered related to the production of the trail running shoes and running apparel Trail Running Shoes Running Apparel Machining Department 342,000 hours 57,000 hours Finishing Department 16,500 hours 34,000 hours O A. $1,200,750 O B. $300,000 O c. $868,500 O D. $869,448Solution
Manufacturing Overhead Rate=Estimated Manufacturing Cost/Estimated Total machine hours or Manufacturing Overhead Rate=Estimated Manufacturing Cost/Estimated direct labour hours Machine Hour rate=900000/400000 2.25 Direct Labour Hour Rate=300000/50000 6.00 Manufacturing Overhead that will be allocated to the trail running shoes In machining department Machine hours (a) 342,000.00 Machine hour rate(b) 2.25 1)Manufacturing Overhead(a*b) 769,500.00 In finishing Department Direct Labour hours (a) 16,500.00 Labour hour rate(b) 6.00 2)Manufacturing Overhead(a*b) 99,000.00 Total manufacturing Overhead(1+2) 868,500.00 Option C is correct
